Mapping the high-tariff world

How the trade war will reorder the global economy — not burn it down.

- Ruchir Sharma

The trade war dust has yet to settle, and may never under US President Donald Trump. But there is no going back to the low-tariff world, led by America for much of the post-World War II era. The effective US tariff rate is likely to remain well above 10 per cent, far higher than the 2.5 per cent rate that prevailed until 2024. So it is time to start mapping the new, high-tariff world.

America's trade offensive has already created enough doubt among domestic businesses and global investors to radically redirect long-established supply chains and capital flows.

The big losers are likely to be the biggest beneficiaries of globalization — American multinationals. As barriers to trade and capital fell in recent decades, US corporations increased profits much faster abroad than at home. Profit margins for S&P 500 companies had held steady since the 1960s. Then margins nearly doubled to around 13 per cent after 2000, coinciding with China's entry into the World Trade Organisation.